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Note 8 - Leases

3 Months Ended

Mar. 31, 2024

Operating and Finance Leases [Text Block]

8. Leases

The Company is a party to operating leases for the Company's corporate office in Cupertino, modular offices, and laboratory facilities. We have also entered into several finance leases for mobile equipment and for the Riverbank Industrial Complex. These finance leases have a purchase option at the end of the term that we are reasonably certain we will exercise, so the leases are classified as finance leases. Our leases have remaining terms of one year to 13 years. We made an accounting policy election to keep leases with an initial term of 12 months or less off the balance sheet. We will recognize those lease payments in the Consolidated Statements of Operations as we incur the expenses.

The Company evaluates leases in accordance with ASC 842 – Lease Accounting. When discount rates implicit in leases cannot be readily determined, we use the applicable incremental borrowing rate at lease commencement to perform lease classification tests on lease components and to measure lease liabilities and right of use (ROU) assets. The incremental borrowing rate used by the Company is based on weighted average baseline rates commensurate with the Company’s secured borrowing rate over a similar term. At each reporting period when there is a new lease initiated, the rates established for that quarter are used.

The components of lease expense are as follows:

	*Three months ended March 31,*
	*2024*		*2023*
Operating lease cost
Operating lease expense	$	181	$	181
Short term lease expense		21		21
Variable lease expense		32		22
Total operating lease cost	$	234	$	224

Finance lease cost
Amortization of right-of-use assets	$	30	$	31
Interest on lease liabilities		86		91
Total finance lease cost	$	116	$	122

Cash paid for amounts included in the measurement of lease liabilities:

	*Three months ended March 31,*
	*2024*		*2023*
Operating cash flows used in operating leases	$	169	$	164
Operating cash flows used in finance leases		86		91
Financing cash flows used in finance leases	$	8	$	83

Supplemental non-cash flow information related to ROU asset and lease liabilities was as follows for the three months ended March 31, 2024 and 2023:

	*Three months ended March 31,*
	*2024*			*2023*
Operating leases
Accretion of the lease liability	$	74		$	87
Amortization of right-of-use assets		105			94

The weighted average remaining lease term and weighted average discount rate as of March 31, 2024 are as follows:

Weighted Average Remaining Lease Term
Operating leases (in years)		4.0			4.9
Finance leases (in years)		12.8			13.7

Weighted Average Discount Rate
Operating leases		14.1	%		14.1	%
Finance leases		13.3	%		13.2	%

Supplemental balance sheet information related to leases is as follows:

	*March 31, 2024*			*December 31, 2023*
Operating leases
Operating lease right-of-use assets	$	1,951		$	2,056

Other current liability		417			406
Other long term liabilities		1,677			1,783
Total operating lease liabilities		2,094			2,189

Finance leases
Property and equipment, at cost	$	2,889		$	2,889
Accumulated depreciation		(258	)		(228	)
Property and equipment, net		2,631			2,661

Other current liability		31			30
Other long term liabilities		2,763			2,687
Total finance lease liabilities		2,794			2,717

Maturities of operating lease liabilities are as follows:

Twelve months ended March 31,	*Operating leases*			*Finance leases*

2025	$	678		$	179
2026		670			159
2027		631			145
2028		650			145
2029		109			145
Thereafter		-			10,105
Total lease payments		2,738			10,878
Less imputed interest		(644	)		(8,084	)
Total lease liability	$	2,094		$	2,794

The Company acts as sublessor in certain leasing arrangements, primarily related to land and buildings. Fixed sublease payments received are recognized on a straight-line basis over the sublease term. Sublease income and head lease expense for these transactions are recognized on net basis on the consolidated financial statements. Sublease income is recorded in the other operating income section of the Consolidated Statements of Operations and Comprehensive Loss.

The components of lease income are as follows:

	*Three months ended March 31,*
	*2024*		*2023*
Lease income	$	491	$	471

Future lease commitments to be received by the Company as of March 31, 2024, are as follows:

Twelve months ended March 31,
2025	$	845
2026		825
2027		670
2028		615
2029		613
Thereafter		631
Total future lease commitments	$	4,199